Miners lead ASX lower as Trump bump wanes

The sharemarket fell for a second day as some of the heat came out of the big mining stocks, even as the global rout in bonds showed signs of slowing.

The benchmark S&P/ASX 200 Index ended 20 points or 0.4 per cent lower at 5326.2, while the All Ordinaries closed down 21 points lower at 5399.8.

Get something wrong here and you don't want to worry the house is on the block. The value of trusts is wide.Credit:Nic Walker

After another rough night for bond investors, stocks bought as proxies for government securities were hit again, with listed property trusts falling 0.5 per cent as a group.

Mining stocks lost some steam, with BHP Billiton losing 1.2 per cent and Rio Tinto down 0.8 per cent as iron ore futures in Asia dropped sharply after an astonishing rally that pushed the bulk commodity's benchmark price to its highest point since late 2014.

Healthcare and telecommunications were the worst performing sectors, down 1.5 per cent and 1.4 per cent, respectively.

The energy sector was the best performer, closing up 1 per cent, receiving a boost on a bounce in oil prices.

Despite the market's jitters, Ophir Asset Management portfolio manager Andrew Mitchell believes the market can continue its post-election rally, particularly as the markets are clinging to the prospect of a pro-business, pro-spending leader to enact change quickly with the Republican party set to control all three levels of government.

"The move in the US 10-year bonds has only further bolstered the case for equities," he said. "Overlay that with a broad expectation for mass fiscal stimulus and suddenly equities look like a pretty good place to be."

But Bell Potter's Richard Coppleson said the sell-off of the past two days is unlikely to continue, adding it may go "a bit further" but not much more.

"Cashed up instos [institutional investors] will be coming in on any pullbacks," he said. "The big rotation is still going on and I still believe that the yield stocks are stuffed and the winners will be banks, resources and value [stocks]."

Market Movers

Bond yields

The global bond rout, which has accelerated since Donald Trump's election as US president last week, abated during Asian trade after intensifying overnight. The yield on US 30-year Treasuries hit as high as 3.06 per cent, their highest point since January, while their 10-year counterparts pushed as high as 2.30 per cent before easing to 2.22 per cent. Australian 10-year bonds spiked above 2.7 per cent before bond prices edged higher, arresting a three day slide, as the shock of Mr Trump's election moderated. Meanwhile, bonds in Italy hit their highest point in a year ahead of its constitutional reform referendum on December 4.

US dollar

The Bloomberg Dollar Spot Index, a gauge of the greenback against its major currency peers, crossed above the 100 point mark for the first time since December, climbing higher on the expectations of higher interest rates under President-elect Donald Trump. But it also eased during Asian session, falling back after surging 3.2 per cent in the three days following the election. Chinese policymakers again cut the value of the yuan in response, setting the midpoint at which the currency can deviate by 2 per cent at 6.84 yuan per dollar. The currency fell as much as 6.86, its lowest level since 2008. The currency is now 5 per cent weaker this year to date.

RBA minutes

The Reserve Bank of Australia's November policy meeting minutes yielded little fresh insight into the central bank's position on interest rates but noted global inflation risks were "more balanced than they had been for some time". The meeting came more than a week before the US election. However the RBA did note "considerable uncertainty" in the labour market and its implications for wages growth. It also said it was difficult to assess conditions in a complicated housing market, which had strengthened in Sydney and Melbourne in particular following two interest rate cuts this year.

OFX results

Shares in foreign exchange trader OFX Group, formerly known as OzForex, tumbled on Tuesday after the company reported a 13.3 per cent fall in statutory net profit for the six months ending September 30 to $9.7 million. Behind the fall in profit are depressed transaction values following the Brexit referendum in June. OFX is used in many cases for property investment in Europe, its CEO said. Shareholders were disappointed by the company's fiscal year 2017 forecast which it said would be only "slightly up" on the previous year. OFX shares closed 16.7 per cent lower at $1.35.

Stock watch: Premier Investments

Broker upgrades put a rocket under the share price of Premier investments, which owns brands such as Smiggle and Peter Alexander, arresting a near two-month share price slide.

Both Citi and Credit Suisse upgraded the stock to neutral from "sell" and "underperform". In a note to clients, Citi analysts said the balance of risks was appropriately reflected in the current stock price. It has a $13.80 target price. Both Citi and Credit Suisse pointed to difficult trading conditions in Australia as a risk, the roll out of Smiggle's UK stores should deliver a boost to earnings in 2017 and beyond.